Gold Price Forecast: XAU/USD Steady Below $1,934
In a slow start to the week, XAUUSD maintains modest intraday gains. Old news is bad news for the gold price, and financial markets are volatile without a new catalyst. The US Dollar trades with a soft tone across the FX market, assisting the bright metal to stay afloat as US indexes recover from their early lows. The S&P 500 and Nasdaq Composite are virtually unchanged from their closing levels on Friday, while the DJIA is the worst performer, down 153 points or 0.44 percent.
The current situation in Eastern Europe is directly related to the poor performance of equities. Russia continues to shell Ukraine and is closing in on Kyiv. Hopes for a diplomatic solution were dashed after the Kremlin stated that far more progress in talks is required before the two countries’ presidents can meet face to face. Meanwhile, as global sanctions tighten, Europe’s reliance on Russian oil and gas has become a major headache for the Union’s leaders. Still, sentiment-related trading appears to be temporarily paused in anticipation of further developments, to the detriment of the GOLD Price.
Across the pond, Asian and European indices are trading mixed, but government bond yields are rising, with the yield on the US 10-year Treasury note rising to 2.24 percent amid concerns that inflation will continue to increase regardless of central banks’ measures. Oil prices resumed their rise after Russia’s Deputy Prime Minister Novak said that if Russian oil is boycotted, the price could rise to $300 per barrel, but this is unlikely. After bottoming out at around $93.50 per barrel last week, West Texas Intermediate is trading above $107.00 per barrel.
Gold (XAU/USD) Technical Outlook
XAUUSD is accelerating north above a key Fibonacci level at around $1,925.00, the 50% retracement of this year’s rally, ignoring the short-term negative tone. Nonetheless, the gold price remains below a flat 20 DMA, while the daily Momentum remains bearish and within negative levels. On the other hand, the RSI indicator has flattened around its midpoint, indicating declining selling interest but failing to forecast a more sustained advance in the near term.
It is worth noting that the gold price bottomed last week at $1,895 per troy ounce, just ahead of the 61.8 percent retracement of the rally above at $1,890.60, a critical support level. The 38.2 percent retracement, on the other hand, occurs around $1,960, where selling interest has been strong. To become bullish, the bright metal would need to clear the latter.
Technical indicators point to a decline, while fundamental indicators point to an increase. The aforementioned Fibonacci levels are critical, as XAUUSD could find its way if any of them is broken. Good luck!
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